As I discuss in a previous post, dropping a zero from the minimum investment needed to open a free Wealthfront account lets CEO Adam Nash (via VP Elliot Shmukler) lord his good guy credentials over Betterment, and at little incremental cost. The fact that Nash has no real pecuniary interest in lowering the paywall (even hundreds of $500 accounts won’t move the firm’s $2 billion AUM needle) makes his white hat shine even brighter. Managing low AUM accounts for free is not a financial move, in short, but a strategic one, albeit with a PR twist. Clearly, Nash wants Betterment to wear the black hat. He’s also not averse to generating a little buzz during the slow summer months, especially given the attention paid lately to his B2B robo competitors. Yet what’s most interesting here is not the focus on differentiation, but the thinking behind it. The model at play is classic tech firm: a “freemium” offer designed to pull in users and build out market share. It’s the antithesis of the traditional wealth management practice, which rewards clients for bringing over more assets, while punishing those who do not. As a built-from-scratch digital firm, Wealthfront suffers from none of the legacy technology and product silo issues that belabor banks, brokerages and other traditional advice providers. Nash’s salvo is designed to just make this point, and as such is only notionally aimed at Betterment. Rather, it’s a broadside against the firms Nash considers his real competitors. These are industry incumbents such as Charles Schwab and banks such as US Bank and Bank of the West that are considering rolling out their own automated investments platforms.